Laura Green

Staying relevant. It’s why companies close old divisions and start new ones, why they introduce new products, make acquisitions, diversify their portfolios and invest in R&D. And for IT companies like Groupware Technology Inc., it’s the reason to complete one transformation, only to pause, and do it all over again.

The need to change was something that IT industry veterans — owners Mike Thompson, Scott Sutter and Anthony Miley — understood well when they acquired Groupware, an IT solutions provider that was on the verge of going belly-up in 2005. They recognized from day one that the company’s survival was dependent upon Groupware’s ability to transition outside its roots of

“systems and storage” and make a name in for itself in IT’s fastest-growing segments: big data, cloud computing, virtualization and data security. It’s a process that’s taken involved two restructurings in seven years.

“It’s a brand-new organization from the company that we acquired,” says Thompson, the company’s president and CEO. “We took a company that was doing at the time of the acquisition $1.7 million, and we turned it into almost $150 million with our company. We injected life into the organization by creating relevancy within the marketplace … and within the customer base.”

Here’s how Thompson and his co-owners have taken Groupware from struggling IT reseller into a leading systems integrator.

Look for an opening

Groupware’s broad customer base includes SMBs all the way to Fortune 500 companies. This means the company’s IT solutions must meet a wide range of technology needs. Delivering solutions that are on the leading edge of today’s systems and storage technology is the only way to stay relevant for customers.

“At the rate that technology is changing — it’s pretty amazing the acceleration that it’s going through — we need to stay in the forefront in regard to what technology is out there,” Thompson says. “It’s having business conversations with our customers to understand what pain points they’re trying to solve for and where they’re trying to take their business.”

Nobody knows the needs of the market better than your customer base. So one of Thompson’s first steps as CEO was to ask customers, “What’s going on in the marketplace?” and “Where do you want to take your business?” to see where Groupware should be investing.

“Understanding what’s going on around cloud computing, big data, next generation data centers and having the expertise to be able to deep dive into those types of opportunities and conversations with customers has allowed us to remain in the forefront,” Thompson says.

“It’s having conversations with our end users in regard to what business issues they are trying to solve and then understanding how we can help them solve those issues, and not just for today.”

What Thompson and his partners realized quickly is that businesses buying IT products also wanted in-depth knowledge and advice from their providers. They began working on a strategy to transform Groupware into a services-led business, which could provide both products and support for its customer’s technical capabilities.

As it turned out, the challenges in the down economy — more companies began seeking IT workarounds to help them manage with more limited resources —gave the company an “in” to present its new solutions and services to the marketplace.

“Customers looked to us to offset some of the reductions that they had in place because business has to go on,” Thompson says. “You still have to solve these business issues. You’ve just got to find new ways to address the business models out there.”

While competitors scaled back, Groupware doubled down on IT investments, including its service segment, which Thompson and his partners believed would propel demand moving forward. The company also invested heavily investments in its labs and engineering capabilities — especially engineering talent.

“Where there is change and uncertainty, there is opportunity,” Thompson says.

“As we went through it, we saw that people were going to pull back. Our opportunity was to go invest heavily to have resources available to [businesses] and to create value out in the marketplace that our customers could leverage from us to continue to be successful in their operation.”

Start tough conversations

By the time the recession began bottoming out in 2010, Groupware had nearly doubled its business, a sign that new investments were paying off. Still, the business transformation also forced Thompson and his executive team to restructure certain areas of the company to make room for those investments.

It was important to engage people in “adult conversations” about why the changes were happening and what they meant.

“I think too often we let niceness get in the way of the truth. You need to have those conversations and not delay the hard conversations, acting decisively based on that and moving forward. I’ve been in situations where the executive team has been slow to make changes and it became irrelevant really quickly by not acting and not executing. It’s critical to have those conversations and then act on them appropriately.”

Groupware has now gone through two restructurings since 2005, a transformation process that’s involved rearranging certain departments, eliminating remote offices and consolidating operations. These strategic moves have helped drive the company’s investment in “rack and roll” solutions — complete technology solutions designed to be rolled into the data center and quickly put into production, generating higher returns for Groupware.

For Thompson, the ability to have honest conversations with team members has helped him keep the company accountable to progress, but also to earn employee respect. People prefer to do business with people that they like, but they’ll also follow a leader who they respect, he says.

“We need to have those hard conversations and get everybody on board with the investments that we want to make as an organization,” Thompson says.

“You can move too quickly, but if you set the goals and hold accountability level, you can make minor changes to that if you need to, or you can pull back.”

That said, building a dialogue with employees is also important in helping you monitor your investments. Strong internal communication gives you a continuous feedback loop to know where your investments stand and what kind of returns they are generating so that you can know when to pull back.

“It goes back to where you place your bets, making bets and then understanding the return, setting expectations associated with those bets and managing toward that,” Thompson says. “If you don’t see the return or you don’t see the return coming, you need to be able to take those resources back and double down where you do see return on those investments coming from or where you believe you can get a greater return.”

Share in excellence

Today, Thompson continues to invest heavily in the company’s core competencies — networking, security and storage — as well as its services practice, its fastest-growing division. Smart investments combined with open and honest communication are two building blocks in a foundation that helps Groupware stay relevant with customers, and the marketplace.

The third is collective ambition, or a shared commitment by employees to the company’s success.

“I’m a firm believer in building winning teams, having the right people in the right positions at the right time,” Thompson says. “Then you’ve got to empower them to go out and execute.

One way Thompson drives collective ambition at Groupware is by creating an environment where employees want to come to work.

“I’ve always felt that it’s our job from a leadership perspective to put our employees in a position to be successful,” Thompson says. “When they drive home that night, we need to give them a reason to come back in the office the next morning.”

What makes a great work environment? At Groupware, it comes down to living the company’s three core values every day.

“The great thing about this transition is that we’ve remained true to our core values of customer service, excellence and fun,” Thompson says. “My belief is that you keep those core values intact and you create an environment where employees can be successful and understand the consistency of the model that you’re bringing to the marketplace.”

An example is the fact that Groupware invites every employee in the company to its national kickoff — an event that many businesses limit to their sales teams.

“It’s customer service,” he says. “It’s the pursuit of excellence and it’s having fun. Those three complement each other.”

Getting employees together for the kickoff is about showcasing the company’s values and vision; but it’s also about “getting everybody to fill part of the success of the company,” Thompson says.

Driving this culture is also why Groupware expanded its focus on collective ambition in 2010, when it rolled out a corporate program around the concept. The goal of the program is to help employees understand their role in serving the purpose of Groupware and better explain to employees how all departments participate and work in harmony to help the company succeed.

“Once you have buy-in and you have collective ambition by multiple individuals in the organization, you can propel the business in the direction that you want to take it,” Thompson says.

How to reach: Groupware Technology Inc., (408) 540-0090 or www.groupwaretechnology.com

The Thompson File

Mike Thompson

President and CEO

Groupware Technology Inc.

Born: Mountain View, Calif.

Education: USC undergrad; MBA Regis University

Leadership philosophy: I don’t shy away from the fear of failure. That actually makes me work harder, and I take those challenges and adversity head-on. I’m a classic example of ‘productive paranoia.’ I’m always looking over my shoulder, always working hard and always trying to better myself to make sure that I can keep moving in the right direction.

What would you do if you weren’t doing your current job? 

In some capacity, creating an environment and opportunities for others to grow. Leadership and mentoring have always been important to me.

What is one part of your daily routine that you wouldn’t change?

When I’m not traveling, taking my kids to school in the morning. Discussing ESPN Radio with my son while my daughter tries to sing over the conversation and dance free of her car seat always starts my day off in perspective.

If you could have dinner with one person you’ve never met, who would it be? 

Cassius Clay. I’m a huge boxing fan. The man who became Mohammed Ali was a personal branding genius and his endless confidence and brashness are endlessly fascinating to me. 

What do you do to regroup on a tough day? 

If I can, go do something with my son, shoot hoops, play catch and so on. It gives me a half hour or so away from my phone. Practice, form and fundamentals messages, repeated to him over and over, are great reminders for me as well.

What do you do for fun?

Get out on the water: wake surfing, boating, being out on the water with friends and family. 

When it comes to attracting businesses, size alone should put Palm Beach County at a distinct advantage over its Florida peers. With 38 municipalities, the county trumps Broward, Pinellas and even Miami-Dade as the largest in Florida and third in population.

The problem is, although geography plays a role, it is not nearly the most important factor for businesses choosing whether or not to invest in your county, says Kelly Smallridge, president and CEO, Business Development Board of Palm Beach County.

“When you’re in economic development, one community can look like another community,” she says. “These CEOs are looking at 20 or 30 communities at a time, and it’s the communities that are going to roll out a much different experience and feeling of a corporate home that they are going to remember.

“We cannot present the same product as everybody else. So with everything that we do, whether it’s the message we deliver in a website, social media message, any printed material or their experience when they visit our community — it must make a lasting impression.”

Since taking the top role at the board in 2004, Smallridge has helped overhaul its economic development strategies to grow jobs and drive business investment in the county. Between 2011 and 2012, these efforts have helped create or retain 1,700 jobs and $166 million of capital investment into Palm Beach County.

In addition, Smallridge herself has been recognized by the South Florida Business Journal as an “Ultimate CEO” and by South Florida CEO as one of the top 40 business leaders in Palm Beach County.

Smart Business spoke with Smallridge to discuss what economic and business leaders can do to create make their counties attractive for businesses and why it’s an ongoing process.

What makes a county globally competitive for business?

Workforce has to be top notch, meaning highly skilled and available. Education K-20 has to also be more than excellent to attract families and corporations to this area — so workforce and education. The cost of doing business has to remain affordable … and the ease of doing business has to be far better than other locations, other competitive sites.

 As CEO, what did you feel that Palm Beach County needed to change to be more competitive with other counties?

I saw a tremendous amount of focus on bringing someone in from other states, when really, a job is a job whether you bring it in from the outside or you create one here locally — it’s the same opportunity for our area residents.

I saw too much of a focus on that outside effort and not enough focus on nurturing those companies that already call Palm Beach County their home. So we traded more of a balance internally to grow what’s in our backyard. As a result, about 70 percent of our job growth in this county comes from companies that already have an existence in this county and 30 percent come from the outside.

How did you begin redirecting the county’s job growth efforts?

First of all, I had to build the best economic development team. Hiring great leaders that were well-experienced in economic development was No. 1. Two, I had to educate my own community — my own public and private leaders — about the value and importance of economic development and how to be well-versed in what CEOs are looking for when they are selecting a location for expansion, retention or relocation.

Starting with your internal leadership, what were the key steps in building a strong economic development team?

If you study economic development organizations throughout the county, the challenge is that a lot of these people are selling counties — they are very good at it — but they don’t know their county the way we know our county because we are products of this county.

Building that team of VPs here who are very passionate about what we are selling is No. 1 — hiring the best economic development professionals. Our average tenure in this organization is 10 years, very rare. … A quarter of our staff was either born or raised in the county that we are charged with selling.

No. 2, making sure that we subscribe to the highest levels of economic development principles. We went through what’s called an accreditation process. There are only two accredited economic development boards in the state of Florida, and we are one of the two. There are something like 25 in the United States.

We didn’t go for accreditation until we knew we had reached certain fundamental goals in this organization, a five-year strategic plan, the highest level of leader on our board, strong financials — most not-for-profits are strong financially — and more private support than public support.

So how did you apply those principles across the county’s 38 cities?

We created something called Economic Development 101. We started training our elected officials and municipal stakeholders on how to answer questions from CEOs looking at their city.

It was very surprising how much elected officials didn’t really understand about economic development and what would be the highlights of promoting their areas: understanding the major employers, the taxes, the cost of doing business, knowing what the strengths are of their cities from a business perspective and being able to speak very articulately about what makes their city one of the best business locations.

How did you develop the Economic Development 101 curriculum?

Once we did three municipalities, we really got a much better understanding of what the learning gap was, what they clearly understood and what they didn’t understand. We changed that accordingly and continue to build upon that. Every time that we go to an election we go back to those cities and re-educate those people. It’s made a very big difference.

Another key part is making sure that economic development is a top priority of the municipalities. If you have strong economic development, your retail thrives, your mom-and-pop businesses thrive and your residential does well because now you have people with expendable income who can purchase your homes and apartments and frequent your restaurants and your retail establishments.

We really try to get them to understand that it’s the high-end economic development that’s going to create the trickle-down and fuel the other types of business operations in their community.

Why is it so important for economic development boards to work closely with city leaders?

Too often, economic development boards focus on their organization and don’t understand that they really represent their entire geographic region.

They have to get out there and make sure that their entire geographic region has tax incentives, that they are moving quickly in expedited permitting, that they are cutting down on the layers of bureaucracy and they can speak the languages that businesses need to hear, that they put out a warm, friendly welcome mat.

Sometimes it’s not about the amount of money or incentives that you send to a CEO; it’s about how warm your welcome mat is.

I can only sell the product that I’m given by my cities. So if they don’t understand how to make their area attractive to businesses, it doesn’t matter how strong my organization is. I have to make sure that the product is strong, and the product is the comprehensive component of 38 cities.

Once you get everyone on the same page, how do you keep them there?

You form an economic development stakeholders council that brings them all together on a regular basis to communicate, share best practices internally, inform them of what new programs have come through the state that are available for all municipalities and that they can integrate into their respective areas.

Some of the things that we’ve brought to the table that many of our municipalities have taken advantage of are Ad Valorem Tax Exemption, passing that through their cities, and expedited permitting ordinances.

This is very large county, and one of the new things that I implemented when I became the leader is, ‘You are visible if you are present in their community.’ The county is about 40 miles long. It’s the largest county east of the Mississippi River and larger than a couple of states. It’s a very big, massive land area.

What I did was to establish satellite offices in the north, central, south and western part of our county. I went from one office, to one office and three satellite offices — big difference. Now you’re present in the community working side-by-side with your teammates and other city officials.

What results have you seen from PBC’s newest economic development initiatives?

Too many presidents of economic development boards are quick to get to that ribbon-cutting ceremony when really we’re in there to help them through the entire process until they turn the key and then for many, many years down the road. That’s why we’ve had companies come back to us five or 10 years beyond our initial relationship to help them with their expansion.

If you have an entire community that is working in the same direction toward creating jobs and you eliminate the competition internally and you get everyone on the same page, you end up with entire group of public and private leaders that are all working toward the same goal.

That may seem very fundamental, but it has taken years to get to that stage. If you look at other communities throughout the U.S., you will find very few where all public and private leaders have the same end goal in mind. ?

How to reach: Business Development Board of Palm Beach County, (561) 835-1008 or www.bdb.org

The Smallridge File

Kelly Smallridge

President and CEO

Business Development Board of Palm Beach County

Born: West Palm Beach, Fla.

Education: University of Florida

What would your friends be surprised to find out about you?

For the most part, I keep my private and professional lives separate. Therefore, my friends would be surprised to see what a normal business day is like for me. Every minute of every workday is usually booked solid with meetings, speeches, interviews, prospecting, traveling, deadlines, with absolutely no downtime until Friday afternoons.

How do you recognize new business opportunities?

I do not like to perform or develop a product or program that I’ve seen out on in the market. If I see it, then I tend to steer away from that and try to figure out what is really going to be the ‘wow’ factor in the way that we present a product. It distinguishes us among our competition.

What happens when you don’t close a business deal that you wanted?

One of the keys to any leader is that you’ve had numerous failures. Every one of those I’ve look at as character building exercises. We’ve lost some deals that I thought that we should have won. I don’t sweat over that too much, but instead, evaluate the situation very quickly, figure out what we did wrong and what we did right, and move toward developing some sort of resolution that ensures to the best of our ability that it won’t happen again. We’re quick to take a look at ourselves and be our biggest critics.

What do you do for fun? 

I am a firm believer that in order for my mind to stay healthy and make good business decisions, I must find time for fun. As a mother of three boys, all of my free time is spent with them at football, basketball or family vacations. We love to cruise to the Caribbean a couple of times a year as a family. In addition, I am blessed to live within a few miles of my parents, my brother and my sister. Getting together at least monthly with the whole family, especially during football games, has been a source of great memories.

Luis Proenza has become somewhat of a poster child for efforts in leading change and driving innovation, collaboration and economic development in the Akron region. Under his leadership, the university has transformed completely, inside and out. UA’s campus has been renovated, as has the area around it. The university’s revenue and research portfolio has more than doubled during Proenza’s presidency, thanks to new community and corporate partnerships.

If Proenza were graded on fulfilling his duties as president of UA, he’d get an A. But if you take into account his decisive and sweeping approach to leadership, he’d probably get extra credit too.

After all, it’s this approach that has enabled Proenza to successfully lead the university to embrace innovation and change.

“We’ve just been used to defending and believing that the very best approach is one of a professor standing in front of a class,” Proenza says. “I happen to think that faculty will remain at the core of learning for a student, but it’s not necessarily the key to be in front of the class.”

They’ll need to be interacting with students in new and greatly expanded ways.

“What we’ve tried to do — and obviously, for any large organization, it’s something that has to be on the front burner at all times — is to be very relentlessly focusing on the fact that we need to innovate if we’re going to sustain our success and if we’re going to be increasingly successful in other ways,” he says. “In short, if we simply do what we’ve always done, we won’t get ahead.”

Smart Business spoke with Proenza to discuss how UA is changing higher education’s role in supporting regional economies and the advancement of “The Akron Model” — a platform for driving economic development in Akron.

SB: What are the goals of The Akron Model?

LP: It is inherently about the university’s role in economic development. Many institutions, when they talk about how they contribute to economic development, talk about what they do to license some technology and to occasionally start a company based on that technology.

We took a very different approach. We felt that we needed to apply all our resources and create what we call a broad-based and robust platform for economic development.

Many educators believe that the best quality is delivered when you have very small classes. And so the approach that I believe will emerge over the next few years is a model in which universities, either as institutions or faculty across institutions, will work to create new products that will be available to all.

It’s an approach to developing through a variety of partnerships and in a variety of connected ways a greater impact on our community. We summarize The Akron Model by saying that we are relevant, connected and productive across the full spectrum of the university’s expertise.

SB: What steps have you taken to lead this model at UA?

LP: The first thing that we’ve done is just make sure that we have the infrastructure to make this possible. So for many, many years we’ve been one of the most advanced institutions in terms of the deployment of information technology tools. We were one of the first totally wired for wireless institutions in the country.

We have also for many years had the lead in the number of our classrooms that are technically equipped to support online learning and distance learning, and we’re now in the process of finalizing ‘delivery to the desktop’ so that the student need not be in a similar classroom elsewhere but can access what we offer at a computer wherever they might be, at whatever time they might wish to access it.

The other piece that we’ve been doing is talking to a number of companies that we probably need to have as partners to make the model work more comprehensively. It’s not something that we’re likely to be able to do entirely on our own.

SB: Why is collaboration important in promoting economic development?

LP: We developed a framework here that we called ‘shared leadership,’ and it basically is the idea that two heads are better than one, that the more that our own employees, our own faculty, our own colleagues, our own students contribute to the process of thinking about our future and formulating that future, the more successful that we will be. A corollary of that is you can’t do that entirely in isolation from the rest of the community.

In the old days, universities used to be thought of as ivory towers. And clearly, if we insist on being isolated from our community, we become irrelevant. If you’re not connected, you can’t be productive.

So collaboration sort of begins to be the driving force of relevance, connectivity and productivity because it’s that way that not only will you succeed as an institution but your larger community will succeed. That’s important because if your community isn’t succeeding, guess what will happen to you as an institution? You won’t get very far. Collaboration becomes very, very vital internally — that’s shared leadership — and externally — that’s The Akron Model.

SB: What criteria do you use to evaluate opportunities for external partnerships?

LP: If we don’t have the strengths and it’s not something that’s of interest in Northeast Ohio, we’d probably just say no. So the two key pieces of where we start are, ‘Do we have some strengths?’ And, ‘Is it needed in Northeast Ohio?’ The programs that we have are very much aligned with the major industrial segments of Northeast Ohio.

So some key examples are the Timken Engineered Surfaces Laboratories that we inaugurated a few weeks back, the Corrosion program, which is a partnership between several companies, the Department of Defense and the University of Akron. Also through our research foundation it’s laying the groundwork for having some companies that will hopefully be revenue-producing and have a chance to feed back to the university in the long term some of that success.

SB: How did the economic downturn affect UA’s focus on economic development?

LP: What you see when there is an economic downturn then an economic boom is there’s a mismatch between how fast the new jobs are being created and how quickly the people who were displaced in the old jobs are able to rise to the occasion by acquiring new skills.

The important thing then is we’re concentrating on communicating to our students as well as to people that are displaced from jobs that the only way that they’re going to progress is to remember that they must acquire the new skills required for the jobs that maybe didn’t exist five or 10 years ago — or maybe even yesterday. It becomes very important to convey that to our students and to let them know the challenges that they will face both as individuals as part of larger organizations and our nation will face as part of the increasingly very, very, very global economy.

SB: What else have you done to make UA a more connected and innovative higher-learning institution?

LP: First is the almost complete physical transformation of the campus. We have built 22 brand-new buildings. We’ve made major additions and renovations to 18 buildings. We’ve added 34 acres of green space. We’ve planted an excess of 30,000 trees and other plantings. We have created walkways and terraces and plazas and gardens for people to enjoy. … We call that program for transforming the campus the New Landscape for Learning.

The other couple of things are what we call the New Landscape for Living … an initiative that has now become a standalone nonprofit to completely revitalize the neighborhoods that surround the campus. That’s moving along very nicely. The third is a partnership with the area hospitals and the nearby medical schools called The Austen BioInnovation Institute. It’s had some successes already, including its first start-up company. That’s all about bringing together our world-class strengths in polymer science and polymer engineering.

SB: What kind of results have you achieved with The Akron Model so far?

LP: We’ve created a set of partnerships with companies where we’re able to not only commercialize our own technology but to work with them to develop new technology and, if they have patents that are sitting on their shelves, to help them commercialize those that they’re not going to use in their own business. In other words, taking stranded technology and making it available.

In the last 10 years, we’ve started as many companies from other people’s technologies as we have from our own. We just celebrated the establishment of the 50th company and about half of those are from our own technology and half from others. We’ve started an angel investor network called the ARC Angels — Akron Regional Change Agents — and that’s met with significant success, reporting now nearly $400 million of follow-on funding for the companies that have presented. We’ve started a women’s investment network. We’ve started a student investment network.

SB: What advice would you have for other leaders about driving innovation in their organizations?

LP: I think it’s going back to three (terms): be energetic, be enthusiastic, be encouraging. Secondly, be relentless in that focus, but at the same time, understand the limits of people to embrace change. It’s got to come hopefully a little faster than we might have had otherwise. But you can’t push it too much or there will be significant pushback. So be relentlessly focused on the future but patient enough not to get so far ahead that you lose the connectivity with your old colleagues. ?

How to reach: The University of Akron, (330) 972-7111 or www.uakron.edu

The Proenza File 

Luis Proenza

President

University of Akron

Born: Mexico City, Mexico

Education: High school at Riverside Military Academy; college at Emory University (BA), Ohio State (MA), University of Minnesota (Ph.D.)

How would you describe your leadership style?

When people ask me that, I tend to use three words, and that’s ‘energetic, encouraging and enthusiastic.’ Those three kind of characterize the core of my approach, … and I typically use one other thing. There’s a quote by the great German poet Goethe that says, ‘Whatever you dream or thing you can, begin it. Boldness has genius, power and magic to it. Begin it now.’ That’s sort of a much better way of saying the energy, enthusiasm and encouragement piece.

How do you set priorities?

The interesting thing that by virtue of being focused, just about everything that I do is very synergistic — one to another. So it that way, I’m able to do more. It’s related. It builds on itself. It doesn't detract and it doesn't distract either

What do you to regroup on a tough day?

Enjoy a glass of wine with my wife and our pets.

What excites you most as you look forward?

Probably the most exciting thing is how many different challenges present themselves every day. In short, I just don’t get bored. Something is different every day, whether it’s the fact that some company’s called us, or we've established a contact with somebody else or that there’s an international visitor. There’s a variety of challenges.

How do you help keep everyone at UA focused on new opportunities?

It’s beating that drum time and time again. We sometimes say that being a leader is like talking to a parade. No sooner have you said it that you've got to say it again and again and again.

 

When it comes to attracting businesses, size alone should put Palm Beach County at a distinct advantage over its Florida peers. With 38 municipalities, the county trumps Broward, Pinellas and even Miami-Dade as the largest in Florida and third in population.

The problem is, although geography plays a role, it is not nearly the most important factor for businesses choosing whether or not to invest in your county, says Kelly Smallridge, president and CEO, Business Development Board of Palm Beach County.

“When you’re in economic development, one community can look like another community,” she says. “These CEOs are looking at 20 or 30 communities at a time, and it’s the communities that are going to roll out a much different experience and feeling of a corporate home that they are going to remember.

“We cannot present the same product as everybody else. So with everything that we do, whether it’s the message we deliver in a website, social media message, any printed material or their experience when they visit our community — it must make a lasting impression.”

Since taking the top role at the board in 2004, Smallridge has helped overhaul its economic development strategies to grow jobs and drive business investment in the county. Between 2011 and 2012, these efforts have helped create or retain 1,700 jobs and $166 million of capital investment into Palm Beach County.

In addition, Smallridge herself has been recognized by the South Florida Business Journal as an “Ultimate CEO” and by South Florida CEO as one of the top 40 business leaders in Palm Beach County.

Smart Business spoke with Smallridge to discuss what economic and business leaders can do to create make their counties attractive for businesses and why it’s an ongoing process.

What makes a county globally competitive for business?

Workforce has to be top notch, meaning highly skilled and available. Education K-20 has to also be more than excellent to attract families and corporations to this area — so workforce and education. The cost of doing business has to remain affordable … and the ease of doing business has to be far better than other locations, other competitive sites.

As CEO, what did you feel that Palm Beach County needed to change to be more competitive with other counties?

I saw a tremendous amount of focus on bringing someone in from other states, when really, a job is a job whether you bring it in from the outside or you create one here locally — it’s the same opportunity for our area residents.

I saw too much of a focus on that outside effort and not enough focus on nurturing those companies that already call Palm Beach County their home. So we traded more of a balance internally to grow what’s in our backyard. As a result, about 70 percent of our job growth in this county comes from companies that already have an existence in this county and 30 percent come from the outside.

How did you begin redirecting the county’s job growth efforts?

First of all, I had to build the best economic development team. Hiring great leaders that were well-experienced in economic development was No. 1. Two, I had to educate my own community — my own public and private leaders — about the value and importance of economic development and how to be well-versed in what CEOs are looking for when they are selecting a location for expansion, retention or relocation.

Starting with your internal leadership, what were the key steps in building a strong economic development team?

If you study economic development organizations throughout the county, the challenge is that a lot of these people are selling counties — they are very good at it — but they don’t know their county the way we know our county because we are products of this county.

Building that team of VPs here who are very passionate about what we are selling is No. 1 — hiring the best economic development professionals. Our average tenure in this organization is 10 years, very rare. … A quarter of our staff was either born or raised in the county that we are charged with selling.

No. 2, making sure that we subscribe to the highest levels of economic development principles. We went through what’s called an accreditation process. There are only two accredited economic development boards in the state of Florida, and we are one of the two. There are something like 25 in the United States.

We didn’t go for accreditation until we knew we had reached certain fundamental goals in this organization, a five-year strategic plan, the highest level of leader on our board, strong financials — most not-for-profits are strong financially — and more private support than public support.

So how did you apply those principles across the county’s 38 cities?

We created something called Economic Development 101. We started training our elected officials and municipal stakeholders on how to answer questions from CEOs looking at their city.

It was very surprising how much elected officials didn’t really understand about economic development and what would be the highlights of promoting their areas: understanding the major employers, the taxes, the cost of doing business, knowing what the strengths are of their cities from a business perspective and being able to speak very articulately about what makes their city one of the best business locations.

How did you develop the Economic Development 101 curriculum?

Once we did three municipalities, we really got a much better understanding of what the learning gap was, what they clearly understood and what they didn’t understand. We changed that accordingly and continue to build upon that. Every time that we go to an election we go back to those cities and re-educate those people. It’s made a very big difference.

Another key part is making sure that economic development is a top priority of the municipalities. If you have strong economic development, your retail thrives, your mom-and-pop businesses thrive and your residential does well because now you have people with expendable income who can purchase your homes and apartments and frequent your restaurants and your retail establishments.

We really try to get them to understand that it’s the high-end economic development that’s going to create the trickle-down and fuel the other types of business operations in their community.

Why is it so important for economic development boards to work closely with city leaders?

Too often, economic development boards focus on their organization and don’t understand that they really represent their entire geographic region.

They have to get out there and make sure that their entire geographic region has tax incentives, that they are moving quickly in expedited permitting, that they are cutting down on the layers of bureaucracy and they can speak the languages that businesses need to hear, that they put out a warm, friendly welcome mat.

Sometimes it’s not about the amount of money or incentives that you send to a CEO; it’s about how warm your welcome mat is.

I can only sell the product that I’m given by my cities. So if they don’t understand how to make their area attractive to businesses, it doesn’t matter how strong my organization is. I have to make sure that the product is strong, and the product is the comprehensive component of 38 cities.

Once you get everyone on the same page, how do you keep them there?

You form an economic development stakeholders council that brings them all together on a regular basis to communicate, share best practices internally, inform them of what new programs have come through the state that are available for all municipalities and that they can integrate into their respective areas.

Some of the things that we’ve brought to the table that many of our municipalities have taken advantage of are Ad Valorem Tax Exemption, passing that through their cities, and expedited permitting ordinances.

This is very large county, and one of the new things that I implemented when I became the leader is, ‘You are visible if you are present in their community.’ The county is about 40 miles long. It’s the largest county east of the Mississippi River and larger than a couple of states. It’s a very big, massive land area.

What I did was to establish satellite offices in the north, central, south and western part of our county. I went from one office, to one office and three satellite offices — big difference. Now you’re present in the community working side-by-side with your teammates and other city officials.

What results have you seen from PBC’s newest economic development initiatives?

Too many presidents of economic development boards are quick to get to that ribbon-cutting ceremony when really we’re in there to help them through the entire process until they turn the key and then for many, many years down the road. That’s why we’ve had companies come back to us five or 10 years beyond our initial relationship to help them with their expansion.

If you have an entire community that is working in the same direction toward creating jobs and you eliminate the competition internally and you get everyone on the same page, you end up with entire group of public and private leaders that are all working toward the same goal.

That may seem very fundamental, but it has taken years to get to that stage. If you look at other communities throughout the U.S., you will find very few where all public and private leaders have the same end goal in mind. ?

How to reach: Business Development Board of Palm Beach County, (561) 835-1008 or www.bdb.org

The Smallridge File

Kelly Smallridge

President and CEO

Business Development Board of Palm Beach County

Born: West Palm Beach, Fla.

Education: University of Florida

What would your friends be surprised to find out about you?

For the most part, I keep my private and professional lives separate. Therefore, my friends would be surprised to see what a normal business day is like for me. Every minute of every workday is usually booked solid with meetings, speeches, interviews, prospecting, traveling, deadlines, with absolutely no downtime until Friday afternoons.

How do you recognize new business opportunities?

I do not like to perform or develop a product or program that I’ve seen out on in the market. If I see it, then I tend to steer away from that and try to figure out what is really going to be the ‘wow’ factor in the way that we present a product. It distinguishes us among our competition.

What happens when you don’t close a business deal that you wanted?

One of the keys to any leader is that you’ve had numerous failures. Every one of those I’ve look at as character building exercises. We’ve lost some deals that I thought that we should have won. I don’t sweat over that too much, but instead, evaluate the situation very quickly, figure out what we did wrong and what we did right, and move toward developing some sort of resolution that ensures to the best of our ability that it won’t happen again. We’re quick to take a look at ourselves and be our biggest critics.

What do you do for fun? 

I am a firm believer that in order for my mind to stay healthy and make good business decisions, I must find time for fun. As a mother of three boys, all of my free time is spent with them at football, basketball or family vacations. We love to cruise to the Caribbean a couple of times a year as a family. In addition, I am blessed to live within a few miles of my parents, my brother and my sister. Getting together at least monthly with the whole family, especially during football games, has been a source of great memories.

As a third-generation CEO of The Ruhlin Co., Jim Ruhlin has the construction business in his blood, sweat and tears. After nearly a century, the pressure remains to keep the family business running, passing the leadership from son to brother to son since 1915.

“It’s always tough having your name be the name of the company,” says Ruhlin, who became president and CEO of the construction services firm in 1996. “There’s a different set and level of expectations for you. I have a son in the business, and I think he understands that too. Because your name is Ruhlin, you’re watched a lot more closely.”

The Ruhlin Co.’s family culture is also one of the reasons Jim Ruhlin feels such a strong personal responsibility to the health, safety and well-being of his 350 employees — a sentiment that was demonstrated when an accident shook the company to its core in 2006.

“We had a death, a very unfortunate death,” he says. “You start to look to yourself, what you have done as a leader and what the company is doing. You felt like you had a good plan, but with something like that, when you take a hard look at it, you learn that your plan isn’t really very effective. That was the impetus to starting the safety program in terms of that’s a very hard lesson to learn.”

The incident didn’t just change Ruhlin’s attitude toward safety. He took it as a call to action to renew the company’s commitment to safety from its Sharon Center, Ohio-based facility to its general contracting, construction management and design-build teams across the country.

Smart Business spoke with Ruhlin about how The Ruhlin Co. has redeveloped its safety culture and the importance of holding employees accountable to safe work practices.

SB: Tell me about the genesis of The Ruhlin Co.’s safety best practices.

JR: My grandfather, my uncle and my father who preceded me were very concerned about people’s safety. The company was one of the first construction companies in the country to hire a full-time safety person, back in the early ’70s. So it has always been a part of our culture. As with everything, you have to grow it. You have to continue to move it forward with changing government regulations. But primarily you want people to go home safely at the end of day, every day. Injury-free is the key.

What we’ve done to grow the culture is we continue to raise its level of importance with all our employees, with our subcontractors and our suppliers. It’s a lengthy process. It’s not something that you can do overnight, and we understood that when we embarked in a different direction in 2006. It’s got to be a combination of things.

SB: What steps do you take to get people refocused on safety?

JR: The value of safety is individual to each different person. What we try to communicate is that we want people to be safe. We don’t want them to have any excuse not to be safe.

First off, you have to have a strong plan in place for how you’re going to execute the safety culture that you have. You have to have accountability. Without accountability, all the rules and regulations and pieces of safety equipment that you have out there aren’t going to make any difference. It doesn’t need to be draconian, but there has to be accountability.

And finally, the third piece of it, which really is the most difficult piece for any company, is you have to have the personal involvement of the people. It has to be behaviorally based. It can’t just be rules, regulations and days off or fired. You have to get into people’s heads to change their behavior.

SB: What are the keys to developing an effective safety plan?

JR: The most important thing is involving the people that you work with. It’s not a one-person thing. In 2007, we started an internal safety committee. It involved not only the management team in the company but our hourly field force. We as a group also work together to fashion the plan and to modify the plan.

Some of the best ideas sitting around a table, when you actually try to take them out and put them in place in the field, are terrible ideas. So it’s a collective effort of the team in how to keep people safe, how to keep them focused on hazards and the correction of hazards.

SB: How do you incorporate feedback from your team to make sure that your safety plan is relevant and effective?

JR: In terms of other hard knocks down the road, things change. You learn that ideas that you have aren’t practical in the field or are practical if you modify them slightly so that the people in the field can physically do what you’re asking them to do.

We actually have a program that if you send in a safety suggestion, you get put in a pool where we have a drawing every month. We give away $200 and $100 cash prizes and we have a quarterly drawing for a trip.

But you have to submit safety ideas or have a safe act to get into the plan. So it’s proactive. You don’t participate just by being here at the company. You have to involve yourself. And it’s worked very well. It’s given us a lot of excellent safety solutions and safety ideas over the past several years.

SB: How do you measure your progress?

JR: There are several safety measurements out there. The one we use primarily is the RIR, which is the recordable incident rate. It’s based on your number of incidents per 200,000 man-hours. We use that to judge our progress on how we’re doing. It’s also an industry standard. There are several companies that want you to have a certain RIR or lower before they will even let you work for them.

SB: What qualifies as an incident?

JR: For a RIR, it’s almost anything. It’s not a first aid. So if you get a cut and you can walk in and put on a Band-Aid, that doesn’t qualify. But a RIR is anything that had an injury where someone went to the doctor, received a prescription, had time off, had to have duties reassigned. So it’s those kinds of things that make it recordable.

SB: How do you keep people accountable to the safety culture?

JR: One thing that’s really new and excellent is what we call a ‘safety timeout.’ Our management team on the projects throughout the day, once a day, has to go and stop someone and talk to them about their safety concerns, about any safety suggestions that they might have.

It’s not a punitive thing; it’s simply, ‘Let’s spend a few minutes talking about safety.’ They approach not only our workers; they can approach the owners, representatives, subcontractors, truckers. Then that information every day is reviewed by the management team on the job.

It does a couple of things. It raises safety awareness, and also it’s brought some good safety suggestions in or things that need to be corrected on the job. That’s done on a daily basis and an almost instantaneous basis.

SB: How have you set expectations for the safety culture as CEO?

JR: I was talking to a group of workers not too long ago when we did what’s called a ‘safety blitz.’ We got the entire management team to spend a week going to all our projects, which covers a couple of states. It’s a lot of traveling, but we go out and talk to the workers. I said, ‘I hope you guys understand we pay you to be safe. We’re paying you a wage, and we want you to work safe, and so we’re willing to pay you your hourly wage to be safe.’

I think if people understand what that really means, they’ll start to get it. It’s not an expectation of production, production, production. Don’t get me wrong, if we don’t produce well, we don’t stay in business. But that production with safety is what we expect. We do [the safety blitz] twice a year, in the late summer and at the end of April.

SB: How does safety benefit your company in addition to creating a safer, healthier workforce?

JR: It raises our capital in the eyes of the workforce and the owners. That’s very important. It makes me sleep better at night. Obviously, it lowers our costs and has an effect on our insurance rates and our workers’ compensation rates, and the people that work here respect this company more because it does place safety at such a high level. The benefits, while you may not be able to measure them all, are many. ?

How to reach: The Ruhlin Co., (330) 239-2800 or www.ruhlin.com

The Ruhlin File

Jim Ruhlin

President and CEO

The Ruhlin Co.

Born: Akron, Ohio

Education: University of Colorado

Coming full circle: We started in 1915 and we built our first building as a schoolhouse out in Creston. That job was built by my grandfather and his brothers, and we have started demolishing that building. So it’s been in service for 98 years and we had the honor of rebuilding the school system, the Norwayne School District. They’ve moved out of that building, and so we’re going to tear it down 98 years later. It’s a very unique thing that not many companies get to experience.

Biggest market opportunities: heavy civil construction, larger projects, health care and education building, hydroelectric power

 

Ruhlin’s commitment to sustainability: To me it’s almost a logical extension of where we’ve been going as an industry and a world: Things need to last longer, work better, use less energy, and be less harmful to the environment. It’s been brought together under the collective name of sustainability, but in my opinion we’ve been moving there for a long time.

Best piece of business advice: Treat everybody the way that you’d like to be treated. I don’t think that there’s a better mantra out there. If you think about how you’re treating someone and you think would I like it if they were treating me this way, that’s about the best litmus test you’re ever going to get.

Where would you like to go that you’ve never been?

Being involved in this industry, I have had ample opportunity to travel. There has never been a dull moment, which is one of the things I really like about what I do. While I can’t name a specific place I would like to go I haven’t already seen, I can say my favorite place is being home with my wife, Susie.

What’s next for Ruhlin? My grandfather and my father and uncle handed me a company with an excellent reputation, and my job’s not to screw it up … I think we’re positioned to grow. We’ve grown some in the down construction economy. We’re adding onto our building. I’d like to continue to grow the company and move into some of the marketplaces that we haven’t been in that we’re getting a toehold in today. We’ve got an exciting five or 10 years ahead of us. 

 

 

It could be a deal. It could be a business strategy. It could even be a house. Whatever the project, Joe Nettemeyer is all about making it bigger, better and more successful.

“I had a boss tell me once that I was not a person that he would put into a business to sustain it,” says Nettemeyer, CEO of Valin Corp. “He’d always put me into something that he wanted to build because I couldn’t help but start trying to re-engineer anything I wanted to get my hands on. Building something is an ongoing challenge, but the results give you a huge amount of satisfaction.”

A builder was exactly what Valin Corp. needed when Nettemeyer joined the industrial solutions business in 2001. Despite years of great success in the semiconductor capital equipment business, Valin has been a fast casualty of the computer-chip industry downturn. With a whopping 90 percent of its revenue coming from chip manufacturing, the company’s revenue plummeted by two-thirds in six months.

“Everything crashed, equipment owners crashed, and we went from being a $75 million business to a $25 million business in about 120 days,” Nettemeyer says. “We didn’t lose market share; it’s just that the slides of the market opportunity dramatically contracted.”

As Valin’s new CEO, Nettemeyer realized the 38-year-old chip manufacturer had two options: Continue in the same direction and fall apart or rebuild as a much more diverse business. Here’s how he transformed the floundering company into one of the nation’s fastest-growing businesses.

 

Shake off complacency

With such a large percentage of Valin’s income tied to shrinking revenue streams, Nettemeyer looked for ways to create new sources of income — and quickly. Acquisitions would allow the company to efficiently diversify its portfolio and grow new business lines.

“When I came in, I realized that we had such a great dependency on too few accounts,” Nettemeyer says. “It was such a huge risk. We had to move into acquisitions. So right in the midst of that turmoil I went out and started borrowing money and buying businesses.”

Not everyone was as excited as Nettemeyer about diversification.

“Experimentation brings rewards and risks that make people uncomfortable,” Nettemeyer says.

“It was challenging for people because they were in a comfort zone. They’d done extraordinarily well for 20 years doing what they were doing, and we were pushing them outside of it.”

In the past, Valin focused on small diameter process management, working with quarter-inch or half-inch tubing. Suddenly, the company was working with up to 60-inch pipe.

Recognizing that he was asking people to make some big changes, Nettemeyer made sure that he and the leadership team were transparent and thorough when they laid out the acquisition strategy to employees.

“I walked the management team through a plan, and we talked about how we could integrate these different technologies and provide solutions versus just selling parts and pieces,” he says.

“There was a lot of communication. I selected all the individuals that I felt were key leaders and we had monthly leadership meetings. We reviewed where we were at, and we had an open book approach to financials. We were measuring the initiatives that we were undertaking. Through that 24-month real crucial period, we were giving monthly feedback.”

Employees appreciated the fact that Nettemeyer didn’t sugarcoat the changes.

“I wasn’t going to pretend that this would all pass,” he says. “There was a core group that really came together and embraced what we had to do.”

At that point, employees who still wanted to take a “wait and see” approach to the market — including two members of Nettemeyer’s leadership team — were asked to go their separate ways.

“I think it’s my responsibility to the company to leave it a better company than it was when I came here,” he says. “That means we’ve got to get out in front. That gives you some heartache and pain. It gives you sleepless nights and scary moments. You have to celebrate the successes, but you also have to say, ‘That was really a dumb idea — let’s stop it.’

“I had to replace some of the management team because they wanted to sit and wait. They thought that the semiconductor industry was going to continue what it always did — it was only in a short-term contraction. Well, that contraction lasted for three years.”

 

Systemize integration

Soon after making Valin’s first acquisition in October 2001, Nettemeyer began buying businesses and product streams that were within the company’s technical bandwidth and that could provide it a competitive advantage. Some acquisitions were a natural expansion of things that the company already did, such as safety devices. Others helped flesh out Valin’s expertise to transform it from a parts provider into a resource for customers.

“We have to find new ways to do things because if you’re going to stand pat, you’re going to get slowly sliced up in the marketplace,” Nettemeyer says. “The biggest struggle we face is the fight against the complacency you get with maintaining the status quo.

“Every year in our planning process, we say, ‘Is this the way that people are going to want to do business with us 10 years from now?’ When you ask that question, everybody says no, and then the next question is, ‘Well, what should we be doing about it?’”

Valin has completed 28 acquisitions since Nettemeyer joined the company 12 years ago, building on technology, and moving more aggressively into light manufacturing, medical devices and service lines. Instead of chip manufacturing, Valin’s biggest markets are now energy, oil and gas. The diversification strategy has allowed the San Jose, Calif.-based company to more than double its size and value over the last five years.

One of the reasons that Valin has been able to integrate so many new businesses so effectively is by having a clearly defined integration process that provides ongoing support.

“The smallest business we’ve bought had $500,000 in revenue,” Nettemeyer says. “The largest we’ve bought had $25 million in revenue. I’d say we spend most of our time buying businesses in the $3 million to $20 million range. We just have to make sure that we take them on at a pace that’s digestible.”

Valin’s integration process goes like this: After purchasing a business, the company converts the business’s IT systems in one weekend. Next, Nettemeyer brings in a team for one week to teach employees how to navigate and enter information into its ERP system. After the tech teams leave, an expert is assigned to stay and work with the business over the following months.

“You teach people, but they forget how to do that and how to make connections,” Nettemeyer says. “We have an embedded expert there for 60 days because we find that’s about how long it takes to get people comfortable with it.

“Then after that we have a call desk that they can call at any time, and they continue to have technical support. It’s getting them integrated into our system quickly that gives us good control over our assets, inventory receivables and cash flow. We’re excellent at doing that.”

 

Invest in education

While contracting revenue forced Valin to shrink its employee base to 45 employees in 2001, acquisitions enabled it to transition into a variety of new markets. By 2011, chip manufacturing — previously the company’s bread and butter — accounted for just 25 percent of the company’s $150 million revenue. This growth also meant Nettemeyer could begin hiring again, adding employees to expand the company’s businesses across the country.

However, there were some challenges stemming from Valin’s diverse and growing footprint.

On one hand, Nettemeyer and his team — like many manufacturing companies in the U.S. — have had to deal with a dwindling talent pool, specifically, the lack of highly qualified engineering talent in the market. Taking advantage of new business opportunities requires a well-trained work force with the sophisticated skills.

To attract and retain talented people, Nettemeyer has worked to create fellowships with IBM, Texas A&M School of Engineering and The Ohio State University to open opportunities for employees at Valin. Each year, for example, the company sends two promising managers to participate in the Texas A&M School of Engineering master’s program in industrial distribution so that they can learn critical skills to drive the business forward.

“Part of our educational effort is we’re monetizing education and teaching engineers how they can run their facilities more efficiently and prevent downtimes — a huge expense,” Nettemeyer says. “They are more likely to be thought leaders, and you get thought leadership through education.”

Investing in education, both formal and informal, also helps you provide a framework that enables employees to come together and be successful. Having employees aligned behind common goals and a common vision has been critical in a culture that gives Valin a competitive advantage.

“If I have five presenters going around trying to teach something, they are all going to teach it differently,” Nettemeyer says. “We wanted to get uniformity in the message. We wanted to make sure that we’re highlighting the things that we think are important.

“If you don’t do that, people on their own will spend their time managing their own basket and not managing to the goals and objectives that we have to achieve.”

Today, Nettemeyer and his leadership team spend much more time visiting with managers to talk about their priorities and responsibilities as owners. Being a 100 percent ESOP business, it’s important for Valin to have a consistent message about what ownership is and the responsibilities owner have to suppliers, shareholders and customers. Three years ago, the company also hired a doctorate in education employee to develop online training modules that give Valin’s 240 employees in nine states and 15 locations a common process and common approach to management and establishing priorities.

“The education component is critically important for us,” Nettemeyer says. “You buy different companies, and they all have their different approach. Everybody thinks that their way is better. What we have to strive for is being consistent. Being consistent means that people have to have a repeatable positive experience when they interact with our company, and we see training as a huge part of that.” ?

How to reach: Valin Corp., (800) 774-5630 or

www.valin.com

 

The Nettemeyer File

Joe Nettemeyer

CEO

Valin Corp.

 

Born: St. Louis

Education: St. Louis University

What is one part of your daily routine that you wouldn’t change?

I get up at 6 a.m. every morning and read for about an hour and a half, usually something that pertains to work. I have a responsibility to the organization as CEO to stay current with contemporary business. Most of the material I read is focused on economics, insights on how to make better decisions and improve the business or how to sustain our business for the long term.

 

What do you do to regroup on a tough day?

After a tough day, I like to go home and have dinner with wife of 36 years, talk about our family — four children and three grandchildren — because they are the cornerstone of my life.

 

What is the toughest business decision you made recently?

I’m making tough business decisions every day, whether it’s the decision to make an acquisition or walk away from an opportunity. These decisions are the challenge of a healthy struggle.  If you think it’s easy, you are missing something.

 

What do you like most about your job?

We’re pushing the envelope. Organizationally, we’ve committed ourselves to being students of our industry … I find that intellectual stimulation to be really gratifying.

How do you find good people?

I remember Ross Perot when he wrote his book, he said, ‘Eagles don’t flock together. You have to go find them one at a time.’ You have to find the people, and you’ve got to have people that have passion and commitment and want to accomplish bigger things. They want to be part of something that they have major accomplishments … you have to be looking all the time for people with that profile.

“We’re in that generation that is now caring for our parents,” says Gilmartin, president and CEO of Sunrise, Fla.-based Interim HealthCare Inc., the nation’s oldest health care franchisor. “And I see the technology driving a lot of care that will be. You’ve got this whole surge of baby boomers that are going to demand more [health] care at home…They’re going to be driving a lot of policy and insurers by being incented and motivated to do more care at home.”

Health care can now be delivered in the home easier than ever before, thanks to advancing technology and a growing demand for health care services. But the rise in the demand for home health care also places significant pressure on home care providers such as Interim HealthCare, which must continually adapt on both fronts in order to stay competitive and effectively serve a new generation of clients with diverse needs.

“The challenge over the last four years is the speed of change,” Gilmartin says. “We’re in an industry that is changing very quickly — home care, personal care, hospice and health care staffing. Pick one. There have certainly been changes in any one of those areas of our business.

“It puts a lot more on providers to accelerate what they’re doing. It isn’t a time to say, ‘We’re just fine the way we are.’ It’s going to be a case of, ‘We’ve got to do more and probably do it at a faster clip.’”

Since rejoining Interim HealthCare in 2008 — she first left the company when split off from a larger health care entity in 1997 — Gilmartin has worked on positioning the company and its network of 300 franchised locations in 43 states at the forefront of the home care evolution. Here’s how she is doing it.

Avoid ‘vision creep’

When Gilmartin came on as CEO in 2008, Interim HealthCare was in the process of transitioning to a 100 percent franchised company. The change came as company leaders looked for a way to streamline the focus on supporting franchises. Eventually, that meant doing away with all of the company-owned locations.

Founded in 1966, Interim HealthCare is the only home care franchisor with a model that delivers health care services from personal care and support to hospice services. This involves a broad spectrum of business areas. So as the company shifted to a 100 percent franchised model, Gilmartin also discovered a number of business lines that no longer made sense under the new model.

“It’s not unusual when you have companies that have close to 50 years of history that they start out and they grow, and as they grow, things get a little bit more complex and spread out,” Gilmartin says.

“You think that you’re focused on something, but you don’t realize that other things have sort of grown up inside of that. Sometimes they’re on the periphery. Sometimes they’ve been there so long that you get a scotoma, where you just don’t see what’s right in front of you. You have a blind spot to it.”

Gilmartin calls this “the vision creep.” What begins as a small investment gradually takes up more and more support, resources or time. Over years or decades, it may even start to take away resources from critical areas of business.

Innovation, while beneficial, can be one of the biggest culprits of vision creep. The same muscles that lead you to innovate can send you in directions that cause your company to stray from its core strengths. For example, investing in innovation led Interim HealthCare to develop its own IT system and a technology platform geared specifically for delivering home health care services. But Gilmartin and the company’s leaders soon found that an IT operation was an unjustified cost.

“We don’t have the DNA of being an IT company,” Gilmartin says. “We have the DNA of providing health care services in the home and providing health care personnel to facilities that need them.”

Instead of funding a whole division to support its IT platform, Gilmartin and her team decided it was a better investment to find a partner to handle its IT. In 2011, the company handed off the division to health care IT firm Procura for continued development.

“That care and feeding is probably being sacrificed from something else,” Gilmartin says. “So you always have to be sure that you look yourself in the eye and say, ‘This is our primary focus. This is what we do best. This is what we want to be doing for our constituents and stakeholders.’ Anything that doesn’t fit in that picture you have to be willing to say the time has come.”

The same went for the other “clutter” accumulated under the old model. Before long, Gilmartin was able to find homes for all of the business lines that weren’t synergistic with the 100 percent franchised structure.

One way to spot vision creep is by constantly asking, “Am I getting the best output in all areas?” or, “Are we getting the results we want?” If you’re not hitting on all cylinders, you need to step back and do some mining with your management team, board and equity partners, Gilmartin says.

When you are able to have those difficult conversations and to look objectively at each area of your business, you free yourself to bring even more leverage to your core competencies.

“You suddenly have this renewed energy, and you feel like, ‘Oh my goodness, we have more resources than we thought because some were being diverted or distracted getting these projects done,” Gilmartin says.

“It was being able to take the clutter out of the picture so that you see very clearly who you are, what your mission and purpose is and what is ultimately our ‘hedgehog,’ which [for us] is knowing that we want to be the most successful ‘continuum of care’ franchisor.”

Lay down a path

In most industries, it’s not enough anymore to respond to the market. Leaders of great companies don’t just evaluate change; they are in a regular cycle of changing all the time, always asking “What’s coming next?”

However, the key to driving proactive change across a large organization — Interim HealthCare employs more than 40,000 health care workers — is to balance the urgency of wanting to see change happen with the patience of recognizing that some changes take time to spread and be adopted by employees.

“Like a Rubik’s Cube — it would be one of those mental challenges of how do you keep the moving pieces and how do you get them to be at the right place at the right time?” Gilmartin says.

“Do franchisees have the information? Are we training them? Do they have the support? When I think of what makes this business tick and be successful, it’s people, but it’s people across a number of moving pieces.”

Essentially, the nature of care at home is that it’s a very personal service. Yet much has changed in the way that service is delivered. Ten years ago, there was no automation. But today, health care providers use point-of-care devices such as tablets, laptops and smartphones to capture patient interactions and electronic data in real time. This emerging technology is also a valuable tool for leaders such as Gilmartin to help drive change at all levels of their organizations.

In addition to traveling year-round to visit different franchise locations, which includes home care visits with nurses and meetings at the franchise and regional level, Gilmartin utilizes technology to stay connected and to find out what staff and management need to be successful, whether it’s training, support or technology resources.

“Every stakeholder has a nugget of wisdom or inspiration that leaders need to constantly be gathering,” Gilmartin says. “I sometimes look at our key leader group or key franchise group and think that the loudest and the biggest have it all right. But what I’ve done a better job of, and every leader can do better, is to communicate more and use lots of media in how you communicate … using the technologies of email and Skype and FaceTime but also including more voices that help shape the future rather than fewer voices.”

Once you have a clear destination in mind, making progress comes down to working closely with members of your team to get there.

“Some groups may have been doing certain pieces of health care for 20 years, but they recognize now that they have patients who require services that they haven’t done and would like to,” Gilmartin says. “We will train them in that and bring them through all the additional certification, training, hiring and actual management of how to do that business … so they can do it just as well as they’ve done all the other parts of the franchise.

“If you’re true to what the core of your company is, you’ll always be innovating better processes, better programs and, in our case, go to the next level of care delivery,” Gilmartin says. “That’s what has to be continually inspired and perspired, because there is a lot of sweat that goes with change.”

Helping its franchises continually adapt and grow has continued to pay off for Interim HealthCare. In 2011, the company generated $740 million of network revenue while maintaining one of the highest employee retention records in the industry — its average employee tenure is 18 years.

“People often think of return on investment first as financial, but there are also stakeholders of our patients and our caregivers and our management team — all of the people who work in our individual franchises,” Gilmartin says. “It’s taking those three circles, and if you bring those together, you can crystallize where those overlap and that keeps you focused. It keeps you rooted in, ‘Is every initiative we’re doing helping reinforce that?’ And success is the result.” ?

How to reach: Interim Healthcare Inc., (800) 338-7786 or www.interimhealthcare.com

 

The Gilmartin File

Kathleen Gilmartin

President and CEO

Interim Healthcare Inc.

Born: Buffalo, N.Y.

Education: D’Youville College

What do traits you look for in an employee?

There are many things you can overcome with training and knowledge, but if people don’t have the right caring and have a leaning to ‘I want to be in this business because I like health care and I choose health care to apply my business skills to’ — it’s not a right fit for everybody. I can tell you from new franchise development we’ve had franchise prospects come in and they are genuinely nice people. By the time we’re meeting them we’ve had a phone relationship, they’ve gone through initial screening, they’ve done homework; but there are times where we have the discovery day to meet us … they don’t necessarily recognize that caring for people is a 24/7 commitment. It includes holidays. It includes vacations.

What’s next for Interim HealthCare?

I see us being in a real growth mode because we’ve clarified we’re 100 percent franchised. We’ve got new franchises that we’re back selling and starting and feeding the forest in places where we haven’t had franchises. We have some very, very large franchises that have been building their infrastructure and working on management and succession planning because the business is getting bigger and more complex. I think home care has come of age.

If you could have dinner with one person you’ve never met, who would it be and why?

That’s easy, Bill Gates. He spent three decades creating products and services at Microsoft that changed how we operate businesses and manage our lives. Then he put his creativity and capital to work to eradicate disease in Africa and other parts of the globe. It would be a fascinating dinner to pick his brain and learn what makes him tick.

What do you to regroup on a tough day?

In any leadership role you have incredibly high days and rock bottom low days. The key is to keep the mental snapshots of the great days front and center so you don’t lose focus or faith on the bad days. The bookcase in my office also has photos I love of my family and friends to remind me not to take myself too seriously.

As a 20-year veteran of the insurance industry, Charlie Rosson has seen his fair share of financial uncertainty, economic downturns and business struggles. So when he was promoted to CEO of Woodruff-Sawyer & Co. on Jan. 1, 2008, Rosson recognized rather quickly that his tenure was going to coincide with all three.

“Right from the start, like everybody, we were thrown a pretty difficult set of circumstances to deal with,” says Rosson, CEO of the San Francisco-based insurance services firm. “So many businesses were impacted in terms of their sales and access to capital and their business overall. The recession impacted our clients directly, and we were challenged to respond to that by coming up with more aggressive programs for them to quickly save them money and to help a lot of them through survival mode.”

Although clients were losing revenue and facing serious financial struggles of their own, the firm still needed to find ways to keep business profitable. But many clients could also no longer afford the firm’s services and products at the same rates or prices as in the past.

Like most professional service firms, Woodruff-Sawyer needed to find ways to keep clients’ businesses afloat but also avoid losing their business.

“Obviously, we had to become more efficient in the way that we do business, and we had to recognize in a lot of cases our clients weren’t willing or didn’t have the wherewithal to pay the same type of fees or commissions that they might have before the difficult time,” Rosson says.

“The way we would structure an insurance program before the financial crisis or before things got really difficult obviously wasn’t implacable anymore. So we had to kind of come to terms and help them with declining values and property, shrinking payrolls and overall downturn.”

 

Identify must-haves

Finding creative ways to deliver the same types of programs for clients more affordably wouldn’t be simple, especially because each client’s business was so different.

Rosson knew that the firm needed to work much more closely with clients to figure out win-win solutions.

“We had to negotiate greatly reduced premiums for them and come up with coverages that met their needs but were at a price point that they could afford,” he says.

So as Rosson and his team began talking with clients about their changing risks and opportunities, they also asked each client for a list of must-haves.

“We really had to dig in and find out what are the things our clients truly value and what things are sort of “nice to haves” that they didn’t value as much, and frankly, weren’t willing to pay for,” Rosson says.

“We’re fortunate that the clients we serve we have a great relationship with and normally have a pretty deep dialogue with them and attempt to fully understand their business,” he says. “So we can go in and talk about the services we deliver, how they’re delivered and how the team is structured, then drill into what things are important to them. Then we ask them honest questions about what things they can live without.”

Knowing your customer’s “deal breakers” can help you pinpoint the exact value that you add for them, allowing you to identify and recommend business solutions that are cost-effective but that still meet that customer’s needs.

“What clients are looking for is value, and in our case, it’s quality of advice,” Rosson says. “It’s how do we help our clients become more successful? And oftentimes when we partner up with them and really understand their business, we can help them execute a strategy that maybe they wouldn’t be able to execute without us.”

You may see opportunities to meet the future needs of your customers as trends emerge of where their businesses are moving and as new technologies come along. For example, the recession spurred the firm’s investment in technology to help address client issues.

“The current generation of buyers has already adopted technology as a core part of the way they do business, and that curve is only going to get steeper as newer generations come into the workforce and become leaders of companies,” Rosson says. “They’re going to expect that they can interact with service providers and professionals through some sort of technology medium. They’re not going to expect the traditional back and forth model that’s defined our industry for quite a while.”

 

Trim the excess

Once you identify your clients’ pain points and priorities, you can begin looking for ways to serve their needs more efficiently.

Rosson realized that although Woodruff-Sawyer continued to deliver valuable services and advice for clients, the firm could save time and cost by streamlining its approach — as could its clients.

“We had to get much more efficient in terms of the way we structured our teams, and we had to use technology in ways that we hadn’t before, in terms of delivering things through the Web that may have been done before either face-to-face or through some other lower-tech way to deliver service and advice,” he says. “So we are using technology in different ways, and we’re just more careful in terms of how we assign resources to client teams.”

Rosson restructured the company’s practice teams to put the focus on having the right people in the right roles, instead of just more bodies, to cut down on unnecessary costs.

“Don’t get swept away by how much revenue you think somebody can generate or how dazzling somebody is,” Rosson says. “Really do your homework and find out what that person is all about. Are they really a fit for the organization? Do they really have the client’s best interests at heart? Can they collaborate well with others? Those are really important things.”

Another way Rosson saw to improve efficiency was integrating technologies that could make communication more user-friendly for clients. Most of the technologies Woodruff-Sawyer has deployed are collaborative, meaning they enable communication between clients and associates outside of the traditional email and face-to-face meetings. In addition to saving its clients cost and time, many changes have streamlined the firm’s processes overall.

For example, the firm now issues all of its certificates online and deployed a portal called Passport, which permits document sharing and collaboration with clients over the Web to expedite projects.

Since seeing the positive impacts, Rosson has continued to pursue a direction that involves technological innovation. Recently, the firm launched an online portal for small businesses called, BizInsure, hired a chief information officer and has made investments in online business to ramp up its overall technology component.

“I’m absolutely convinced that emerging technology is going to have a disruptive impact on our business,” he says. “And I believe it’s going to be in a positive way, and we’ll be right there to capitalize on it. The way that we’re going to interact with our clients in the future is going to be different that our traditional model.”

 

Enable a responsive culture

Of course, it’s difficult to devise efficient and cost-effective solutions for clients if you don’t empower employees to be creative and test their ideas. Businesses that run their organizations with a heavy-handed, top-down leadership structure can easily stifle the kind of creative, engaged culture it takes to provide the most value to clients, Rosson says.

“To be a top-tier professional services firm, by definition, you want to have professionals — and you need to treat them that way,” he says. “The way to treat them that way is to respect what they do and be there if they need advice and guidance. You have to have a certain amount of structure, but listening and not being overly prescriptive or top-down in our approach has really paid dividends.”

Rosson avoids a command and control culture at Woodruff-Sawyer by furthering the firm’s corporate vision to remain an independent brokerage firm. Being a 100 percent ESOP firm gives the company a flexible infrastructure where top people feel empowered to make decisions and operate with more freedom, he says. With no shareholders, employees are able to focus on the client and do things for clients that might be difficult under a different leadership structure.

“We’re able to do things for clients in terms of being flexible and the people who are working with clients have a lot more authority to get things done for them, deploy resources and make decisions that our competitors who might have a different ownership system can’t,” Rosson says.

“Our independence is a key part of our competitive advantage and a big part of our culture.”

The independent structure has also helped the firm attract talented employees who value autonomy and the ability to be responsible to a client’s needs. And for companies that can’t do an ESOP, leadership comes into play even more. As a CEO it’s important to set the tone for your direct reports and other employees by showing that you trust their decision-making abilities.

“I truly believe that we have the best people in the industry,” Rosson says. “These are people who have arrived at a place professionally. They don’t need me to look over their shoulder or a leader to second-guess what they are doing.”

Rosson says in the future, the firm will continue to be prudent and watching the bottom line while making investments in technology and internal perpetuation to keep the firm independent. By successfully delivering insurance services in an efficient and user-friendly way for clients, the firm has not only retained clients, it’s also been extremely successful in adding new business.

“The vast majority of our growth is organic growth through just going out and telling our story,” Rosson says. “With a lot of our competitors, and the large ones, it can be very difficult or very expensive to access very sophisticated resources. What we do is deliver those same resources or the same level of advice — or even better — but do it in a way that’s less expensive and much more user-friendly.”

As a result, Woodruff-Sawyer has grown its revenue approximately 40 percent since 2007, generating approximately $70 million in revenue in 2011.

“Like so many businesses, the downturn forced us to work smarter and more efficiently and embrace technology,” Rosson says. “As the economy has slowly improved and our clients’ businesses has improved, we’ve found that we’ve been able to leverage our technology and we haven’t had to increase our costs at the same rate that maybe we would have. So we’re actually seeing that our business is healthier now, after the downturn, than it was before.” ?

How to reach: Woodruff-Sawyer & Co.,

(415) 391-2141 or www.wsandco.com

Takeaways

Ask customers where your business provides the most value.

Utilize technology to cut down on time and cost in customer interactions.

Empower employees to help clients by avoiding a top-down culture.

 

The Rosson File

Charlie Rosson

CEO

Woodruff-Sawyer & Co.

 

Born: San Jose, Calif.

Education: B.A. in history from UCLA

 

On growth: If you’ve got a very strong core business — I’m so bullish on the insurance business — you don’t need to take on too much debt or be overly grandiose in your expansion plans. Expansion and acquisitions all should be driven around acquiring people who fit into the organization, really bring something to the table and add to your organization rather than just executing a geographic growth strategy or putting pins in the map. All of your expansion should be for the right reasons, with the right people with client in mind, rather than trying to fill out (geographically) with different offices all over the place.

 

What is your favorite part of the business?

The best part of the business is getting out and meeting with clients and prospects. That’s why most of us got into this business and what really drives the passion for it. A lot of our relationships with clients go back 10, 15 and 30 years even. That’s the most fun part of it. I think it’s also really gratifying to successfully run the business and see the impact that you can have on employees’ lives.

 

What would you be doing if not for your current job?

Teaching English in Argentina

 

What one part of your daily routine would you never change?

Interacting with our clients and prospective clients

 

How do you regroup on a tough day?

I try to exercise every day.

 

What do you for fun?

Cooking, traveling, reading, coaching kids’ sports

As a 20-year veteran of the insurance industry, Charlie Rosson has seen his fair share of financial uncertainty, economic downturns and business struggles. So when he was promoted to CEO of Woodruff-Sawyer & Co. on Jan. 1, 2008, Rosson recognized rather quickly that his tenure was going to coincide with all three.

“Right from the start, like everybody, we were thrown a pretty difficult set of circumstances to deal with,” says Rosson, CEO of the San Francisco-based insurance services firm. “So many businesses were impacted in terms of their sales and access to capital and their business overall. The recession impacted our clients directly, and we were challenged to respond to that by coming up with more aggressive programs for them to quickly save them money and to help a lot of them through survival mode.”

Although clients were losing revenue and facing serious financial struggles of their own, the firm still needed to find ways to keep business profitable. But many clients could also no longer afford the firm’s services and products at the same rates or prices as in the past.

Like most professional service firms, Woodruff-Sawyer needed to find ways to keep clients’ businesses afloat but also avoid losing their business.

“Obviously, we had to become more efficient in the way that we do business, and we had to recognize in a lot of cases our clients weren’t willing or didn’t have the wherewithal to pay the same type of fees or commissions that they might have before the difficult time,” Rosson says.

“The way we would structure an insurance program before the financial crisis or before things got really difficult obviously wasn’t implacable anymore. So we had to kind of come to terms and help them with declining values and property, shrinking payrolls and overall downturn.”

Identify must-haves

Finding creative ways to deliver the same types of programs for clients more affordably wouldn’t be simple, especially because each client’s business was so different.

Rosson knew that the firm needed to work much more closely with clients to figure out win-win solutions.

“We had to negotiate greatly reduced premiums for them and come up with coverages that met their needs but were at a price point that they could afford,” he says.

So as Rosson and his team began talking with clients about their changing risks and opportunities, they also asked each client for a list of must-haves.

“We really had to dig in and find out what are the things our clients truly value and what things are sort of “nice to haves” that they didn’t value as much, and frankly, weren’t willing to pay for,” Rosson says.

“We’re fortunate that the clients we serve we have a great relationship with and normally have a pretty deep dialogue with them and attempt to fully understand their business,” he says. “So we can go in and talk about the services we deliver, how they’re delivered and how the team is structured, then drill into what things are important to them. Then we ask them honest questions about what things they can live without.”

Knowing your customer’s “deal breakers” can help you pinpoint the exact value that you add for them, allowing you to identify and recommend business solutions that are cost-effective but that still meet that customer’s needs.

“What clients are looking for is value, and in our case, it’s quality of advice,” Rosson says. “It’s how do we help our clients become more successful? And oftentimes when we partner up with them and really understand their business, we can help them execute a strategy that maybe they wouldn’t be able to execute without us.”

You may see opportunities to meet the future needs of your customers as trends emerge of where their businesses are moving and as new technologies come along. For example, the recession spurred the firm’s investment in technology to help address client issues.

“The current generation of buyers has already adopted technology as a core part of the way they do business, and that curve is only going to get steeper as newer generations come into the workforce and become leaders of companies,” Rosson says. “They’re going to expect that they can interact with service providers and professionals through some sort of technology medium. They’re not going to expect the traditional back and forth model that’s defined our industry for quite a while.”

Trim the excess

Once you identify your clients’ pain points and priorities, you can begin looking for ways to serve their needs more efficiently.

Rosson realized that although Woodruff-Sawyer continued to deliver valuable services and advice for clients, the firm could save time and cost by streamlining its approach — as could its clients.

“We had to get much more efficient in terms of the way we structured our teams, and we had to use technology in ways that we hadn’t before, in terms of delivering things through the Web that may have been done before either face-to-face or through some other lower-tech way to deliver service and advice,” he says. “So we are using technology in different ways, and we’re just more careful in terms of how we assign resources to client teams.”

Rosson restructured the company’s practice teams to put the focus on having the right people in the right roles, instead of just more bodies, to cut down on unnecessary costs.

“Don’t get swept away by how much revenue you think somebody can generate or how dazzling somebody is,” Rosson says. “Really do your homework and find out what that person is all about. Are they really a fit for the organization? Do they really have the client’s best interests at heart? Can they collaborate well with others? Those are really important things.”

Another way Rosson saw to improve efficiency was integrating technologies that could make communication more user-friendly for clients. Most of the technologies Woodruff-Sawyer has deployed are collaborative, meaning they enable communication between clients and associates outside of the traditional email and face-to-face meetings. In addition to saving its clients cost and time, many changes have streamlined the firm’s processes overall.

For example, the firm now issues all of its certificates online and deployed a portal called Passport, which permits document sharing and collaboration with clients over the Web to expedite projects.

Since seeing the positive impacts, Rosson has continued to pursue a direction that involves technological innovation. Recently, the firm launched an online portal for small businesses called, BizInsure, hired a chief information officer and has made investments in online business to ramp up its overall technology component.

“I’m absolutely convinced that emerging technology is going to have a disruptive impact on our business,” he says. “And I believe it’s going to be in a positive way, and we’ll be right there to capitalize on it. The way that we’re going to interact with our clients in the future is going to be different that our traditional model.”

Enable a responsive culture

Of course, it’s difficult to devise efficient and cost-effective solutions for clients if you don’t empower employees to be creative and test their ideas. Businesses that run their organizations with a heavy-handed, top-down leadership structure can easily stifle the kind of creative, engaged culture it takes to provide the most value to clients, Rosson says.

“To be a top-tier professional services firm, by definition, you want to have professionals — and you need to treat them that way,” he says. “The way to treat them that way is to respect what they do and be there if they need advice and guidance. You have to have a certain amount of structure, but listening and not being overly prescriptive or top-down in our approach has really paid dividends.”

Rosson avoids a command and control culture at Woodruff-Sawyer by furthering the firm’s corporate vision to remain an independent brokerage firm. Being a 100 percent ESOP firm gives the company a flexible infrastructure where top people feel empowered to make decisions and operate with more freedom, he says. With no shareholders, employees are able to focus on the client and do things for clients that might be difficult under a different leadership structure.

“We’re able to do things for clients in terms of being flexible and the people who are working with clients have a lot more authority to get things done for them, deploy resources and make decisions that our competitors who might have a different ownership system can’t,” Rosson says.

“Our independence is a key part of our competitive advantage and a big part of our culture.”

The independent structure has also helped the firm attract talented employees who value autonomy and the ability to be responsible to a client’s needs. And for companies that can’t do an ESOP, leadership comes into play even more. As a CEO it’s important to set the tone for your direct reports and other employees by showing that you trust their decision-making abilities.

“I truly believe that we have the best people in the industry,” Rosson says. “These are people who have arrived at a place professionally. They don’t need me to look over their shoulder or a leader to second-guess what they are doing.”

Rosson says in the future, the firm will continue to be prudent and watching the bottom line while making investments in technology and internal perpetuation to keep the firm independent. By successfully delivering insurance services in an efficient and user-friendly way for clients, the firm has not only retained clients, it’s also been extremely successful in adding new business.

“The vast majority of our growth is organic growth through just going out and telling our story,” Rosson says. “With a lot of our competitors, and the large ones, it can be very difficult or very expensive to access very sophisticated resources. What we do is deliver those same resources or the same level of advice — or even better — but do it in a way that’s less expensive and much more user-friendly.”

As a result, Woodruff-Sawyer has grown its revenue approximately 40 percent since 2007, generating approximately $70 million in revenue in 2011.

“Like so many businesses, the downturn forced us to work smarter and more efficiently and embrace technology,” Rosson says. “As the economy has slowly improved and our clients’ businesses has improved, we’ve found that we’ve been able to leverage our technology and we haven’t had to increase our costs at the same rate that maybe we would have. So we’re actually seeing that our business is healthier now, after the downturn, than it was before.”

How to reach: Woodruff-Sawyer & Co., (415) 391-2141 or www.wsandco.com

Takeaways

  • Ask customers where your business provides the most value.
  • Utilize technology to cut down on time and cost in customer interactions.
  • Empower employees to help clients by avoiding a top-down culture.

The Rosson File

Charlie Rosson

CEO

Woodruff-Sawyer & Co.

Born: San Jose, Calif.

Education: B.A. in history from UCLA

On growth: If you’ve got a very strong core business — I’m so bullish on the insurance business — you don’t need to take on too much debt or be overly grandiose in your expansion plans. Expansion and acquisitions all should be driven around acquiring people who fit into the organization, really bring something to the table and add to your organization rather than just executing a geographic growth strategy or putting pins in the map. All of your expansion should be for the right reasons, with the right people with client in mind, rather than trying to fill out (geographically) with different offices all over the place.

What is your favorite part of the business?

The best part of the business is getting out and meeting with clients and prospects. That’s why most of us got into this business and what really drives the passion for it. A lot of our relationships with clients go back 10, 15 and 30 years even. That’s the most fun part of it. I think it’s also really gratifying to successfully run the business and see the impact that you can have on employees’ lives.

What would you be doing if not for your current job?

Teaching English in Argentina

What one part of your daily routine would you never change?

Interacting with our clients and prospective clients

How do you regroup on a tough day?

I try to exercise every day.

What do you for fun?

Cooking, traveling, reading, coaching kids’ sports

 

It looked to be another great year for Republic Steel.

Coming off its 2005 acquisition by Industrias CH, S.A de C.V. (ICH) — a fast-growing steel producer and processor based in Mexico City — the company had cleared up all its previous debt, the steel industry was flush with opportunity, and as the new

was laser-focused on building a strong team and investing in best-in-class facilities to position the 125-year-old steelmaker for growth.

And that, of course, is when everything went south.

“After October 2008, the whole world changed for the industry,” says Vigil, who joined the Canton, Ohio-based steel company in 2005. “The recession threw us a curveball that we were not planning. I don’t think we were looking ahead. We had really relied on intelligence based just on market view.”

As the largest maker and supplier of special bar quality (SBQ) steel in North America, Republic produces steel for applications such as automotive and energy. It has been developing its steelmaking practices for more than a century. But even a company with annual sales of more than $1 billion wasn’t immune to the shock of the 2008 financial downturn.

Declining demand and struggling customers, who were urgently looking for ways to cut costs and scale back, hit the company hard. Almost overnight, Republic Steel saw its volume of business nosedive.

Streamline your structure

Not yet knowing the full scope of the downturn, Vigil knew that Republic Steel — like its customers — needed to cut costs to minimize the financial fallout. So the first step was to look for ways the company could streamline plant operations.

“At that point, the volume with the plants that we had had a lot of fixed costs,” Vigil says. “We were forced to shrink our footprint to be able to manage our costs and have a profitable business.”

Increasing efficiency without sacrificing quality can be tricky. You need to examine the profitability of every segment of operations thoroughly. First, identify the areas that have the most efficient costs, and second, identify where costs overlap. This process allows you to consolidate the most efficient operations and shut down equipment and functions that no longer make sense.

By making these changes, Republic Steel was able to shrink its footprint to that of a much smaller company in a short time period.

“That was a very different situation for us from 2005, but it was also a very good experience for us to try to model our business for the future,” Vigil says. “It allowed us to look at things in more detail and understand our business and our cost and the opportunities that we had to be more efficient.”

Taking cost out of operations not only allowed the company to produce SBQ steel more efficiently, but it also freed up resources, which Vigil reallocated to enhance the company’s quality, delivery and range of products in its SBQ steel business to provide more value to customers.

“We have to be right there with them making a product that suits their needs,” Vigil says. “Our No. 1 qualification or differentiation in the market is our ability to work with technicians of our customers to develop the products that fit their needs and then produce them consistently with a low cost and high quality and delivering them on time.”

When you’re not making a commodity, you need to be more focused on quality and continuously improving your products to stay competitive, Vigil says. The key to staying relevant was investing in the company’s strengths, such as its years of experience in the steel industry. The fact that the company’s Canton plant was the first-ever producer of SBQ steel provides it with a strong competitive advantage.

“Our brand has good recognition, and we continue to build on that by making our customers really comfortable in the long run that they have a true partner with Republic Steel, a company that knows what it wants and that can adapt to the changing market as needed,” Vigil says.

“With more than 125 years of know-how, you get a very good result. You can continuously provide the same quality that your customers are used to with more efficiency. It allows you first to be more competitive in the marketplace and maintain and improve your quality in the product.”

Since 2005, Republic Steel has reinvested close to $130 million in new equipment and new processes into its core Northeast Ohio facilities, which include plants in Canton, Lorain and Massillon, Ohio. In 2012, the company also announced that it would invest more than $87 million in a new electric arc furnace and equipment at the company’s Lorain, Ohio, steelmaking facility — a move that is adding approximately 450 employees.

The company chose the Lorain plant for the investment because of its close proximity to the existing customer base and to other Republic Steel facilities. Having a smaller physical footprint allows you to allocate resources to growing areas more easily to develop strong teams, while delivering a consistent experience for customers.

“We see a strengthening automotive industry as well as a lot of growth in the energy sector side through the gas horizontal drilling process,” Vigil says. “We see ourselves in a very good position to serve those markets in the long term.

“It gives us an opportunity to serve our customers with more product and a very solid footprint in the long run. Our customers have a supplier that has no debt and that is investing in its business. So we feel that our customers see us as a long-term partner, and they can stick with us for years to come.”

Look to your core

When your company is facing market volatility, past plans and strategies may get tossed out the window rather quickly. To ensure that Republic Steel didn’t lose sight of its identity in the chaos, Vigil used the company’s core values to guide the strategy — specifically two values passed down from its parent company, ICH.

The first was carrying a debt-free balance sheet.

“When we acquired the company in 2005, we inherited some debt from the previous administration,” Vigil says. “We worked very hard to pay it off with our own resources and some support from the parent company.”

Even when the company was losing volume during the recession, Vigil wasn’t willing to take on debt in favor of gaining more financial flexibility. In fact, he says borrowing money often results in the opposite outcome for companies by stifling their spending. Carrying zero debt allows you to make decisions without dealing with banks or lenders.

“Some companies have different opinions about debt, and in certain cases, it allows companies to be flexible and grow faster when an opportunity comes, but we still have that flexibility because having no debt makes us attractive to banks,” Vigil says.

“The recession has been the best proof of the strategy. We tested it through this downturn, and we were able to manage through the recession a lot better than some other companies who have big debt or a lot of interest to pay.”

As a result, the company has been debt-free since March 2006, operating as a true cash-flow company.

“It makes us a stronger company, and it allows us to keep reinvesting even in the downturn because the money that we generate is really for us and not to cover any debt obligations that we have,” Vigil says.

The second core value that helped guide the company through the recession was having a diversified mix of sales. Carrying a wide range of products makes the company a one-stop shop for many customers. So even in the downturn, Vigil continued to make investments to expand Republic Steel’s capabilities in emerging markets, such as natural gas and energy.

“The volatility in our customers’ industries continues to be something that we’re monitoring very closely,” Vigil says. “The economic situation worldwide, starting with Europe being so volatile, continues to have a big effect on our customers’ ability to project their levels of operations.

“Having a more diversified mix of sales allows us to not have all of our eggs in one basket and participate in different industries, and we’re able to better ride the cycles. We, as a company, believe that if we stick with those two values — remaining debt-free and continuing to have a diverse mix of sales — we can deal with the volatility in different markets.

“We’ve prepared our company to be better geared to react now than we were in 2008. Through these changing circumstances, we’ve created a more flexible company with the investments that we’re making, allowing us to grow our strength faster.” ?

How to reach: Republic Steel, (800) 232-7157 or www.republicsteel.com

Takeaways

1. Find ways to cut cost by shrinking your footprint.

2. Allocate resources to growth areas.

3. Guide your strategies with core values.

The Vigil file

Jaime Vigil

President and CEO

Republic Steel

Born: Mexico City

Education: Universidad Anahuac in Mexico City

What is one part of your daily routine that you wouldn’t change?

I like running every morning before going to work; it really makes a difference helping me start every day with great energy and a clear head ready for business.

Best piece of business advice:

I’ve benefited a lot from the experience that my team brings to my decision-making process. That saying that more heads are better than one — that does apply in practice. It’s particularly important in soft science to surround yourself with good members willing to openly give their take on problems so that together you come up with the best solutions.

What do you do for fun?

There is no better way for me to spend my time when I’m not at work than with my wife and kids. From training for a marathon with my wife, to being attacked with toy swords by my three and four year old boys … it’s the best time of my day!

 

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